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The West Coast appears to be the best coast—for stock-picking, that is. As has been the case since mid-2011, most of the big-name Wall Street banks have been bested by Western regional brokerages in our semi-annual Barron's-Zacks ranking of their stock selections.

Tops in the latest contest is little McAdams Wright Ragen, whose focus list took first place in the six months through December, with a 13.8% return. For the third time in a row, the Seattle-based broker won the 60-month race, too, producing a 38% return. (See table below.) Those two results dusted the S&P's 5.95% and 8.59% returns over the six-month and five-year stretches.

Says Sid Parakh, McAdam Wright Ragen's acting research director: "Many of the companies we put on the list we never covered previously."
Josh Gray for Barron's

McAdams rounded out its strong showing by garnering second place in the other two rankings, returning 18% for 12 months and 43% over 36 months. Its scores are all the more impressive as they cover both a bear- and a bull-market period. Not too shabby.

Los Angeles-based Wedbush Securities finished at the top of the 36-month ranking, though it did slip back from stronger finishes in the past two rankings. Nevertheless, like McAdams, Wedbush accomplished a "three-peat," taking home the three-year gold medal for the third consecutive time, with a 73% return that smoked its nearest competitor and the S&P's 36%.

The L.A.-based broker also had decent 12- and 60-month showings. Over six months, however, its 3% return trailed both that of the average broker and the market.

Every six months, Barron's and Zacks rank the best stock picks, or focus lists, of America's stock brokers, some of them famed Wall Street names, others less well known.

In general, our surveys have indicated that the average broker tends to outpace the market during bullish phases, as was the case in 2009 and 2010 and the last half of 2012. In the more uncertain times of 2011 and 2012's first half, that's not always the case.

In the one- and three-year contests, the benchmark index outpaced the brokers. But in 2012's final six months, the average broker's gain of 7% beat the S&P 500's advance. However, since mid-2011, the average broker's focus list's returns haven't kept up with the broad market.

CHANGES IN FORTUNE among a couple of sectors last year made stock-picking treacherous, and brokers who skillfully navigated the shifting currents did well. "Energy was a real downer" in the first half, recalls Zacks equity strategist Tracey Ryniec. In fact, it was the period's worst sector, off 3.4%, versus the market's 8.3% rise. Yet in the second half, energy—led by refiners—rose 6%, topping the market's 4.7% price return and 5.95% gain with dividends.

Tech and health care, she adds, were the mirror images of energy. They climbed 13% and 10%, respectively, in the first half, but weakened in the second, with health care matching the market, and tech up less than 1%.

What's perhaps most unusual about McAdams Wright Ragen's success is that it employs only five stock analysts and, unlike the large banks and even some other regional brokers, doesn't cover every sector. "We don't look at sectors, we look at stocks," says Sid Parakh, McAdam's acting director of research. The Pacific Northwest broker favors just 20-25 names at any time, and "many of the companies we put on the list we never covered previously," he adds. Parakh says these companies are in good businesses, have attractive valuations, strong managements, and solid balance sheets.

Goldman's 2012 victory came on stock choices in the tech, media, and telecom groups, as well as from energy and non-bank financials in the second half, says Robert Boroujerdi, co-head of Americas equity research. An underweighting in utilities also helped.

Honorable mentions again go to regional broker Edward Jones, a silver medalist in the 60-month contest. The St. Louis-based firm's picks returned 18%, beating the average broker's selections and the market.

Edward Jones has been a consistent proponent of the conservative buy-and-hold strategy involving large-cap, quality stocks that pay growing dividends. Dave Powers, the brokerage's director of equity research, says it looks for shares that minimize downside risk in tough times, while also holding out the promise of participating in rallies.

Scheidt vows, "I'll be back." He's made that promise before and fulfilled it.

New Constructs and the
Morgan Stanley MS -1.7075185899201322%Morgan StanleyU.S.: NYSEUSD35.69
-0.62-1.7075185899201322%
/Date(1427835929202-0500)/
Volume (Delayed 15m)
:
10017575AFTER HOURSUSD35.6901
0.000100000000003320.0002801905295601009%
Volume (Delayed 15m)
:
167571
P/E Ratio
21.895705521472394Market Cap
71073303951.5116
Dividend Yield
1.1207621182404035% Rev. per Employee
700961More quote details and news »MSinYour ValueYour ChangeShort position
(MS) Smith Barney brokerage were also in the cellar for the 36- and 60-month contests, respectively. New Constructs CEO David Trainer says his list was punished by "getting caught in some value traps" like
Dell
(DELL), which fell sharply in 2012. However, the stock remains on his list and is rallying in 2013, on hope for a leveraged buyout. Asked to comment on Morgan Stanley's results, a spokeswoman says: "The majority of our underperformance took place in 2009, when the high-quality, defensive names that make up our portfolio were not in demand."

One caveat: As Barron's has noted in the past, most brokers go through hot and cold streaks, so it pays to look for durable, long-term outperformance.